Collision Damage Steering

Steering is the directing of damaged vehicles to specific body shops for repair by an insurance company.

Before discussing the "hows" of steering it is necessary to review why steering exists.

MONEY!

Insurance companies choose to direct consumers in an effort to save money.

Body shops enter into a contract with insurance companies to receive additional work and therefore make money.

This arrangement is commonly referred to as a Direct Repair Program (DRP), although each insurance company has its own personal name for them. By design, poor quality repairs are not a desired result of what insurers are looking to receive? No, but they have no profit in receiving quality repairs either.

It is often argued that discounts are not a component of the DRP model. However, parts discounts, use of imitation parts and used parts are normally a part of the contract. With very finite targets of usage defined, monitored and scored. Future participation for a repair shop may hinge on maintaining desired imitation and used parts usage percentages.

Labor rates can be discounted by $2, $4 an hour or more with some companies receiving a discount of $28 or more. Yes in an industry that by and large has not yet cracked the $50 per hour mark for body and refinish labor rates, some shops may still be accepting work for less than $20 an hour for some companies. One major insurance company actually has a clause in its agreement/contract that the shop will repair vehicles for them at the lowest rate that they charge to any insurance company, fleet account or individual.

Paint and material caps can also be included in the contract between insurer and shop. What this means is that the normal method of charging for material is overridden at a set amount. When this cap is met, the shop is then expected to absorb the additional cost of materials in the repair.

Other considerations shops may provide for an insurance company include, but are not limited to, free evaluations and free storage for total loss vehicles. It is often agreed that the insurers’ repairs are given preferential treatment. This last clause has led to insurers holding shops responsible for delivery times. If the repair takes longer than the mandatory time the repair shop would then be liable for the cost of the rental car.

The consumer is told that the insurer “warranties” the repairs. However, closer inspection of both the insurance/body shop contract and the customer warranty finds that the warranty will be the shop’s responsibility.

Consumers need to question how they will benefit from the relationship of the insurance company and body shop. How will substandard parts, discounted labor, paint & material caps and time repair guarantees produce high quality repairs to their vehicles?